New Delhi. Due to rising inflation and volatility in the stock market, now investment in gold is increasing. Due to the huge fall in cryptocurrency, investors have also turned towards gold. Gold is a good investment option in rising inflation. There are many options for gold investment in India. If your intention is also to invest in gold, then definitely keep in mind that returns from gold are not expected in the short term. It is a good profitable option in the long term.
live mint According to a report, mainly inflation is the result of more currency coming into the market. Central banks of many countries, including the US and India, reduced their interest rates significantly during the Corona epidemic. Now central banks have to tighten their monetary policy again to rein in rising inflation, so that cash flow is reduced and if this reduces demand, there will be some control on inflation. On the other hand, the supply of gold is limited. Therefore, when people buy more gold, its price goes up.
dead asset is gold
Gold is called a dead asset. The investment made in this is not related to the business. The investment made in shares increases as the company earns profits. But this is not the case with gold. The investor does not get any dividend on gold. There is no interest on gold. It has happened many times that there is no return from gold till the long term. At the same time, the stock market gave good returns during this period. For example, after the year 2021, if the Nifty has given a CAGR of 10.5 percent, then the CAGR of gold has been 8.2 percent.
Many options for investment in gold
There are many options to invest in gold. You can buy gold ornaments, gold coins or biscuits from the bullion market. You can buy gold units from Gold Savings Funds and Gold Exchange Traded Funds (ETFs). Apart from this, you can also invest in Sovereign Gold Bonds (SGBs) issued by the government. All these means of investing in gold are linked to the price of gold itself. But, the purpose of each one is different. If you take gold from the bullion market, then you can wear it by making jewelry. ETFs are right for those who want to trade in gold. Sovereign Gold Bonds are a good option for those who want to invest in gold for a long time, as it has a lock-in period of 8 years.
Is it right to take digital gold
For the past few years, some fintech companies are also offering investors to buy digital gold. Digital gold is purchased from an app and resides in the vault of the partner company. But, it is unregulated. Last year itself, SEBI had tightened the companies regarding digital gold, after which it has suffered a lot. Due to the absence of any kind of regulation, investing in digital gold is very risky.
How much is the tax?
If you take gold from the bullion market, then you have to pay Goods and Services Tax at the rate of 3 percent. GST is not applicable on Sovereign Gold Bonds and ETFs. If you sell gold after 3 years and you make a profit then you have to pay capital gains tax on it. This tax is levied according to the tax slab in which your income falls. If you make a profit by selling gold after more than three years from the date of purchase, then you have to pay long term capital gains tax at the rate of 20 per cent. Capital gains tax is to be paid on gold and ETFs purchased from the bullion market. This tax is not applicable on profits made from Sovereign Gold Bonds.
FIRST PUBLISHED : July 08, 2022, 12:38 IST